Stimulus funds for high-speed Internet access tangled up

The Obama administration knew that there'd be a lot of interest in the $7.2 billion for high-speed Internet projects it included in last year's huge economic stimulus package.

The goal was to quickly create tens of thousands of jobs and connect millions of poor and rural communities to broadband, a technology that's essential for economic development, modern medicine and education. But officials had no idea that the demand for the cash would be so overwhelming. They also were bombarded with questions and challenges from large cable and phone companies including Comcast, Time Warner Cable and AT&T. The combination has swamped the agencies in charge and created a bottleneck that might threaten disbursement. After nearly a year, about 7% of the funds has been assigned to specific projects.

The effort to spend that money quickly but responsibly is like "trying to use a fire hose with a garden hose nozzle," says Craig Settles, an independent consultant who helps companies develop broadband strategies. "Getting broadband to the American public is not going to be easy."

Such concerns have trained a spotlight on two agencies grappling with the biggest telecommunications program either has ever handled. Congress gave the Commerce Department's National Telecommunications and Information Administration (NTIA) responsibility to allocate $4.7 billion. The remaining $2.5 billion is being handled by the Agriculture Department's Rural Utilities Service (RUS). The agencies say that they'll meet the Sept. 30 deadline for allocating the funds.